EU states are using "ambiguous and outdated" international rules on what can count as official development assistance (ODA) to include high-interest loans to developing countries in their annual aid figures. Donors can borrow money on bond markets, lend it to developing countries at higher interest rates, and still count it as aid despite the fact that a profit is made.
Jeroen Kwakkenbos, policy and advocacy officer at the European Network on Debt and Development (Eurodad) explained "Some European governments are interpreting vague aid rules as a licence to scale up profit-making loans under the guise of development co-operation”
Developing countries face interest payments of almost €600m (£499.8m) a year on these loans to Europe. Demanding developing countries spend large amounts of money repaying loans can reduce resources for health and education for desperately poor people. In 2012 alone, developing countries paid €590m to Europe in interest on loans counted as aid, with three donors receiving 91% of this: France (€120m), Germany (€174m) and EU institutions (€248m).
Last year, former chairman of the OECD’s Development Assistance Committee , Richard Manning, attacked the OECD for allowing loans with high-interest rates to count as aid. In a strongly worded letter to the Financial Times, he said the current rules are "encouraging finance ministries to get away with murder as they seek to massage reported aid upwards at minimum cost".
Rich countries have doubled the amount of aid money they give as loans over the past decade reaching $16bn in 2011, while aid loans from multilateral development banks amounted to $42bn – twice as high as in 1995.
Taken from here
Jeroen Kwakkenbos, policy and advocacy officer at the European Network on Debt and Development (Eurodad) explained "Some European governments are interpreting vague aid rules as a licence to scale up profit-making loans under the guise of development co-operation”
Developing countries face interest payments of almost €600m (£499.8m) a year on these loans to Europe. Demanding developing countries spend large amounts of money repaying loans can reduce resources for health and education for desperately poor people. In 2012 alone, developing countries paid €590m to Europe in interest on loans counted as aid, with three donors receiving 91% of this: France (€120m), Germany (€174m) and EU institutions (€248m).
Last year, former chairman of the OECD’s Development Assistance Committee , Richard Manning, attacked the OECD for allowing loans with high-interest rates to count as aid. In a strongly worded letter to the Financial Times, he said the current rules are "encouraging finance ministries to get away with murder as they seek to massage reported aid upwards at minimum cost".
Rich countries have doubled the amount of aid money they give as loans over the past decade reaching $16bn in 2011, while aid loans from multilateral development banks amounted to $42bn – twice as high as in 1995.
Taken from here
No comments:
Post a Comment